HP ‘not messing about’ as it takes on tablet market again

HP chief operating officer Bill Veghte has claimed some Australian businesses are close to buying HP’s new tablets the ElitePad 900 and Slate 7 for their fleet but would not reveal who.
Photo: Louise Kennerley

The enterprise tablets will run
Microsoft’s
Windows 8 operating system, while the Slate line will run Google Android when they are released next month.

“In the tablet space, we are serious about this, we’re not messing around with it," he said. “Is it an entry? Yes. Have we got a multi-year strategy around the hypothesis? Absolutely."

Microsoft‘s Steve Ballmer
Photo: Bloomberg

HP chief executive
Meg Whitman
last month declared tablets were part of its attempt to “incrementally" shift the company’s focus away from desktop PCs. But so far it has been weighed down by a series of aborted attempts.

Related Quotes

Company Profile

HP backed former Microsoft chief
Bill Gates
’ original vision for Windows XP-based tablets in 2003, while its Slate moniker was given to a 7-inch tablet unveiled by Mr Gates’ successor,
Steve Ballmer
, in 2010, running Windows 7. The latter product was never officially launched.

An attempt to re-enter the market in 2011 with the TouchPad, running a version of the webOS software gained through its $US1.2 billion acquisition of phone maker Palm, was pulled from shelves just six weeks after launch, and contributed to the departure of chief executive
Leo Apotheker
.

Mr Veghte said the ElitePad tablets were aimed at striking a balance between consumer features and enterprise security.

“We entered predicated on a very clear hypothesis that said enterprises need a tablet that their employees are excited about but that can effectively interact with the enterprise without all sorts of costs and add-ons," he said.

HP TouchPad tablet
Photo: Bloomberg

Some Australian businesses were close to buying the tablets for their fleet but would not reveal their names, Mr Veghte said.

Telsyte
analyst
Foad Fadaghi
said HP had an opportunity to gain some traction in the enterprise and consumer spaces with the tablets, but noted that competition for both markets was extremely high.“As you ask an engineering team to support multiple platforms, that’s expensive," Mr Veghte said in defence of a move away from the software.“We’ve got a lot of work to do but when I look at our deck of cards versus some of other competitors in the marketplace, I like our opportunities."

Mr Veghte was briefly in Australia last week to meet with local staff and more than 50 customers including the Commonwealth Bank, which Ms Whitman also visited last year amid fears the company could lose its long-standing contract with the bank.

HP Slate 7
AFR

He said the company was looking to convince its customers that HP remained a “steady hand" after several years of confusing strategy and poor performance among some sectors of the business.

Mr Veghte, who joined HP in 2010 after 19 years at Microsoft, was appointed chief operating officer mid-last year as part of a restructure set in place by Ms Whitman.

His position as COO has seen Mr Veghte take over the internal processes involved in the turnaround, including plans to lay off 29,000 staff, or almost ten per cent, of global staff.

Much consternation has focused around HP’s often-confused internal and acquisition strategies, which has seen it focus heavily on software products under Mr Apotheker at the cost of its PC division, only to switch paths again under his successor Ms Whitman, a former eBay CEO and one-time gubernatorial candidate.

Mr Veghte said he believed Autonomy was a good acquisition for HP, albeit at a much smaller cost. He also pointed to other acquisitions such as Compaq, 3PAR, 3COM and ArcSight as evidence the company has not always faltered in its mergers and acquisitions.

But another billion-dollar acquisition is unlikely for HP in the short-term.

“We have to make sure that we are doing incredible due diligence in any M&A going forward and we have to make sure that’s the best use of shareholder’s money," he said. “Our capital allocation strategy for our free cashflow in FY13 is pay down the debt."

A re-entry into tablets and potentially smartphones is part of HP’s attempt to transition away from those troubled years.

Mr Veghte defended HP’s progress as successful to date, while taking swipes at major rivals Cisco as unsustainable and IBM as “ageing".

“We have an innovation engine, a strategy and we’re beating the expectations in the first quarter by nearly 16 per cent," he said.